Prepaid Debit Card Reviews, Complaints, Etc

Tag: student loans

  • Can I Just Pay What I Can Afford on My Private Student Loans?

    Can I Just Pay What I Can Afford on My Private Student Loans?

    Below is an interesting question and answer session regarding private student loans. Read below for some great advice from Steve Rhodes, the Get Out of Debt Guy!

    Question:

    Dear Steve,

    So I have private loans and a few federal loans my month payment currently is for all my loans is about $1000. My employer has been helpful by letting me work OT to make this happen. Currently working 12 hours of OT a week. But that is about to end, they are working on eliminating OT for all employees. So that will drop my money to allow me to pay only $779. The problem is about the $1000 is all the lender told me I could get my payment lowered. I would not pay any less to my federal because they seem more important but my private loans will take a hit.

    I am looking for direction, I got no help from the lender, and wondering what would happen is I just paid a little but not full payment to each private loan. Will the payment still go to default?

    Kenny

    Answer:

    Dear Kenny,

    I applaud you for understanding the overtime solution is not sustainable and will collapse at some point, leaving you stranded on payments you can’t afford. So many people don’t look forward enough to see those issues brewing.

    The partial payment strategy does not solve the problem. You will probably be charged a late fee and you will move towards default, but just a little slower.

    Private student loan lenders are not required to make any payment affordable. They don’t have to adjust the payment and they can hold you to the original payment you agreed to when you took out the loan.

    That being said, private student loan lenders often allow someone to defer payments or pay a lower amount. That actually just causes your loan balance to grow exponentially. They will be tacking on interest to the unpaid balance. It is so ironic that people jump for the deferred payment option when they can least afford to pay the loan but it just makes the unaffordable loan bigger still.

    You have a few logical options.

    1. You can clear the decks of any unsecured consumer debt you may have to make room for your full student loan payments. To do that you should talk to a local bankruptcy attorney. And in fact, some of your private student loan debt may be easily discharged in bankruptcy. Read this for more information.
    2. You can get your federal student loans onto an income based repayment program and lower the payment to make more room for the private student loans. See my guide on low payment programs here. But beware, these low payment solutions can be a trap if not used correctly. Please read why, here.
    3. If the private student loans are simply unaffordable, you might just have to default completely. Defaulting is not the first strategy but it does have some benefits. Read this article on the top ten reasons to default on your private student loan.

    There are some new federal repayment options coming out soon. If you’d like to be notified about them I would suggest you subscribe to and watch my email newsletter. You can subscribe here.

    Steve Rhode – Consumer Debt Expert

    Get Out of Debt Guy – Twitter, G+, Facebook

    If you have a credit or debt question you’d like to ask, just click here and ask away.

    Source

    This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.


    Personal Finance Syndication Network

  • Student Debt Remains Part of Economic Instability

    Student Debt Remains Part of Economic Instability

    After four years of university study and several more for a second or third degree, students are left with tremendous debt and a big hole in their pockets. Despite attempts to stay within a budget, find secure employment and start a payback plan, graduates find themselves stuck in the mire of financial obligations and bank loans.

    Not all graduates face the same fate and the type of degree can determine the ease of finding proper employment as well as the salary associated with it. For example, many educators today view a humanities degree as practically useless when it comes to procuring a job with any semblance of sufficient income and specialty degrees such as those in the medical, dental or engineering fields require extra years of study and hence additional loans.

    According to an article published in The Atlantic in March 2014, even those who continue on with their studies and obtain humanities Ph.D.s have job prospects no better than those who end their studies earlier. In the Atlantic article, English professor William Pannapacker suggested that a humanities Ph.D. “will place you at a disadvantage competing against 22-year-olds for entry-level jobs that barely require a high-school diploma.” Pannapacker went on to advise would-be graduate students to recognize that a humanities Ph.D is now a worthless degree and they should avoid going into further debt in order to acquire one.

    Andrew Green, associate director at the Career Center at the University of California, Berkeley has a different take on the situation. He admits that there is no doubt that humanities doctorates have struggled with their employment prospects, but he points to less widely known data showing that between a fifth and a quarter of these doctorates go on to work in well-paying jobs in media, corporate America, non-profits, and government.

    Paula Chambers, founder of Versatile Ph.D., a service that prepares graduate students for the non-academic job market, takes a positive view of the employment situation for humanities graduates. Chambers points to humanities Ph.D.s in many industries far removed from academia such as a Ph.D. in Greek and Roman history who landed a marketing job at a wine estate, a Ph.D. in British history who is now a branch chief at the National Parks Service or a Ph.D. in Classics exerting influence as a director at a hedge fund.

    But were these the goals set by humanity students when they started their graduate education? How long will it take them to repay the loans they incurred in order to reach the academic level they did?

    When it comes to graduates in other disciplines, the numbers aren’t much better. According to a research study conducted by UK specialist insurer, Endsleigh and reported in England’s Guardian in August 2014, only 34% of the then recent graduates had found full-time work in the career of their choice.

    The vast majority of graduates do, eventually, find work, but often it is in a different field to their degree. According to Higher Education Statistical Agency figures for 2012-2013, only 8% of the students surveyed were unemployed six months after leaving university. But how much were they earning? The Endsleigh survey found that almost half (48%) of them said their current wage was lower than expected, with 57% currently earning £15,999 or less with the average salary around £20,000. Certainly not enough to pay back all the debts accrued over the years of study.

    One of the solutions to the debt-study dilemma that has proven successful but which may not be appropriate for everyone is to work while attending school. Both small and large corporations are eager to employ students who will agree to a lower salary while attending classes towards their degree. On some levels it is a win-win situation. The student gains work experience and has some income towards his/her studies while the hiring firm pays less for a worker who, at the end the tenure, may well prove appropriate to the position and be taken on as a permanent member of the staff without the need of retraining for the job.

    In the above situation, although there no guarantee of employment upon completion of the student’s degree, at least an accumulated debt of untold proportions has been avoided.
    The most obvious direction to choose for avoiding education loans is simply to postpone studies altogether until the money is there. But this is a catch-22. No education, no job. No job, no money. What is a student to do?

    The problem of student debt is growing. Here are the statistics according to a report posted on CNBC in June, 2015, and the numbers are staggering: There is more than $ 1.2 trillion in outstanding student loan debt, 40 million borrowers and an average balance of $ 29,000. The high levels are serving to perpetuate or even worsen economic inequality and are undercutting the opportunity and social mobility that higher education should provide.

    Perhaps one way to avoid the debt altogether would be for students to plan to put away a small amount of money on a steady basis as soon as they are able and to learn how to invest their money early on in their lives. Opening an investment account with a good broker can be done at any age with the approval of an adult and as an individual from the age of 18. Investing can also be fun but learning to do it properly requires at least the minimum of training and education.

    With today’s precarious global financial situation accelerating, it appears that the question of student debt and its repercussions remains a large part of the economic equation.

    This article by Cina Coren first appeared on DailyForex.com and was distributed by the Personal Finance Syndication Network.

    Personal Finance Syndication Network

  • Turning Student Debt Into Good Credit

    Turning Student Debt Into Good Credit

    There’s just no escaping the fact that a mountain of student debt is a big burden. And these days, kids fresh out of college are looking at a Himalayas-like amount of debt to pay off before they’ve even started their careers. According to a recent story in US News & World Report, college kids owe an average of $33,000 from the moment they grab their diplomas and stride into adulthood.

    But in that same story reporter Divya Raghavan offers up a way grads can make lemonade out of that forest of lemons. How? By responsibly paying off all of that student debt and showing lenders that you know how to handle your finances responsibly. Doing so is a way to build the kind of credit score and credit history every adult needs. “They can result in a graduate being able to qualify for his or her first apartment, first car loan and, very often, first unsecured credit card,” writes Raghavan.

    As Raghavan points out, there’s nothing particularly magical about how this all works. In simple terms, a large amount of student debt can only be paid off with diligent and persistent hard work. Which means that if a fresh graduate makes on-time payments month after month creditors are going to get the message that this young adult is someone who can be trusted with a car loan, mortgage or credit card. Lenders will know that a former student is low risk because student loan payments are reported to the three major credit bureaus, TransUnion, Experian and Equifax. The credit score and report that these agencies come up with is based on how timely and complete those repayments are.

    And their impact goes beyond just how likely you are to get a car loan. There are times when prospective employers will ask applicants for their credit report. Although employers can only review a potential hire’s credit report with the consent of a job applicant, it’s important to be aware of the possibility of a request. In fact, a study by the Society for Human Resource Management found that almost half of employers conducted a credit check on potential employers.

    There are times when even the most well-meaning and responsible graduate just can’t make those loan repayments. When that is the case, Raghavan writes that the best approach is to defer the loans. Defaulting on the debt will do lasting harm to your credit score. “As a good rule of thumb, remember that it’s OK to defer, but not to default,” she writes.

     

     

     

     

     

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